Question: Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset. For each of

Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset. For each of the following independent scenarios, determine the amount to be capitalized for the new fixed asset that Desert is acquiring (i.e. the original cost Desert will report on their balance sheet for the new asset) and the gain or loss to be recognized at the time of the exchange. Desert paid $5,100 and exchanged the old asset. The fair value of the new asset received was $28,000. The exchange has commercial substance.

1.)What is the Original Cost of the NEW Asset reported on Desert's Balance Sheet?

2.)What is the amount of the gain or loss (if any) Desert will recognize as a result of this transaction?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

Use the following information to answer the next 3 questions: Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset....

Q:

Use the following information to answer the next 3 questions: Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset....

Q:

Use the following information to answer the next 3 questions: Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset....

Q:

Use the following information to answer the next 3 questions: Desert, Co . is trading a machine which has an original cost of $ 6 0 , 0 0 0 and accumulated depreciation of $ 3 5 , 0 0 0 , for another...

Q:

Use the following information to answer the next 3 questions: Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset....

Q:

Use the following information to answer the next 3 questions: Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset....

Q:

Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset. For each of the following independent scenarios, determine the...

Q:

Use the following information to answer the next 3 questions: 1-Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed...

Q:

1-Desert, Co. is trading a machine which has an original cost of $60,000 and accumulated depreciation of $35,000, for another fixed asset. For each of the following independent scenarios, determine...

Q:

Use the following information to answer the next (8) questions: Sparky Inc. is trading a machine which has and original cost of $60,000 and accumulated depreciation of $35,000 for another fixed...

Q:

Use the following information to calculate ending balance in accounts receivable. Accounts receivable at the beginning of the period....... $20,000 Revenue for the period (there are no cash...

Q:

What prompted Congress to pass the Securities Act of 1933 and the Securities Exchange Act of 1934? What is the purpose of these laws?

Q:

2.26 A California study concluded that following 7 simple health rules can extend a mans life by 11 years on the average and a womans life by 7 years. These 7 rules are as follows: no smoking, get...

Q:

5. Develop a scenario comparing two PH programs and involving the use of a CBA.

Q:

You have just received a letter from a customer who purchased new rims for his car from your tire store several months ago. He paid for the rims when he ordered them because they were a special...

Q:

Teamwork. Technology.Work with one other student to search the Internet for information on how e-mail, instant messaging, and blogs have affected writing skills, including tone or voice, spelling,...

Q:

Revise and edit the following message so that it communicates more clearly and concisely to an American receiver with an average reading level (Objectives 2 and 3): I recently was petitioned to...